Depends on how you installed it... if you're running on your local computer, then it sounds like you're running in "production" mode without first compiling assets with `rake assets:precompile`. (See http://guides.rubyonrails.org/asset_pipeline.html for some more info.)
Or just run it in development mode with `rails server`.
Sorry I didn't mention it, I followed the wiki install which sets up the production environment. Just noticed after seeing your post that there are pretty simple instructions for the development setup, if I just kept looking past the wiki link.
I ran it in development mode first with the only hitch being I needed to re-run the mysql user/table creation with _dev, but once I did that the development started up flawlessly on localhost:3000. I then went back to the apache/production server and suddenly it looks a lot better, but I still have some missing images (FATALs in log for GETing assets still?).
I'm still confused about how to point my rails server to production instead of development, but I'm completely satisfied that it is working perfectly with rails in development mode. Here's a screenshot showing the images missing on my production/apache/passenger setup:
Or just run it in development mode with `rails server`.